Cuban cigar prices may double when US Embargo is lifted
Posted: 24 February 2008 11:38 AM   [ Ignore ]
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By Thomas Mulier | Bloomberg

Premium Cuban cigars would jump in price if the US were to end an embargo on trade with the island nation and permit their sale in its cigar market, the world’s largest, according to Swedish Match AB.

Demand for Cuban cigars might double overnight if the ban were lifted, a step Swedish Match managers view as “inevitable,” Chief Financial Officer Lars Dahlgren said on Wednesday. The Stockholm-based owner of the Macanudo brand has drawn up plans to prepare, he said in a telephone interview.

Speculation about an end to the ban arose on Tuesday as Fidel Castro resigned as Cuba’s president after 49 years, though the US State Department said no policy changes are imminent. American smokers buy two-thirds of the world’s premium cigars, according to Swedish Match, the industry’s second-largest member, which has contested ownership of the Cohiba brand with Cuba’s government.

“There’s no way you can serve Europe and the US if Cuban cigars became big in the US,” said Dahlgren, who declined to say when the ban might be lifted.  “If consumers would demand the same quality of cigars, prices would skyrocket.”

The entire industry eventually would benefit from an end to the embargo, which would create more interest in smoking cigars, according to Dahlgren.

The ban, which was imposed in 1962 by John F. Kennedy and tightened by later US presidents, has sparked a dispute between Swedish Match and Cuba’s government over the rights to the Cohiba brand. It also was the cause of a legal battle between Bacardi Ltd. and Pernod Ricard SA for the Havana Club rum trademark.

Cigars sold now under the Cohiba name in the US are made in the Dominican Republic. Cuban-made Cohibas are sold outside the US by Corporacion Habanos, a partnership between the Caribbean nation’s government and Madrid-based Altadis SA.

Handmade Cohiba Corona Especial cigars from the Dominican Republic cost about $7 each on the website of Burlington, North Carolina-based JRCigars.com, which bills itself as the world’s biggest cigar store. A Cuban Cohiba costs 23.40 Swiss francs ($21) at the Davidoff cigar shop in Geneva.

Altadis has been taken over by Imperial Tobacco Group Plc, the Bristol, England-based maker of John Player Special cigarettes. Imperial might get a boost of as much as 2 percent to earnings before interest, tax, depreciation and amortization if the US were to end the embargo, said Jonathan Fell, an analyst at Deutsche Bank AG in London.

“We are prepared for this to happen sometime,” Dahlgren said of a lifting of the ban. “The US is our most important premium cigar market. If the US consumer wants Cuban cigars, we will seek to share that segment of the market.”

Swedish Match may lose market share initially if the ban were ended and Cuba kept its monopoly on production, he said. In addition to its own brands such as Garcia y Vega, the company owns Cuban heritage trademarks including Partagas and Hoyo de Monterrey that were bought from exiles.

“The first few weeks we wouldn’t sell a single cigar because everyone would be buying the forbidden fruit,” the CFO said.

Swedish Match, the world’s second-biggest maker of smokeless tobacco products, reported a 31 percent gain in fourth-quarter profit today after tax increases in Sweden prompted it to boost snuff prices.

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Posted: 24 March 2008 11:50 PM   [ Ignore ]   [ # 1 ]
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Americans wouldn’t be affected much, in my opinion.  If a box of cigars retails in Cuba for $300 US, that same box is typically sold for $500-$1000 on the web to American consumers willing to order online.  If the embargo ends and demand increases, the Cuban government can double the prices, but Americans may still end up paying what they did before when they buy them in the states.

The demand for Cuban cigars would probably taper off after a few years.  It seems too easy for the quality of the cigars to go downhill if they rush production, unless the Cuban government simply raises the prices and keeps the same production standards.

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Posted: 19 July 2009 03:16 PM   [ Ignore ]   [ # 2 ]
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TasteOfCuba - 24 March 2008 11:50 PM

Americans wouldn’t be affected much, in my opinion.  If a box of cigars retails in Cuba for $300 US, that same box is typically sold for $500-$1000 on the web to American consumers willing to order online.  If the embargo ends and demand increases, the Cuban government can double the prices, but Americans may still end up paying what they did before when they buy them in the states.

The demand for Cuban cigars would probably taper off after a few years.  It seems too easy for the quality of the cigars to go downhill if they rush production, unless the Cuban government simply raises the prices and keeps the same production standards.

Please, noooooooooo!!!!!!!  When I first went to Cuba un 2003, a box of Monte Cristo 2, torpedo, cost about $120 US. Now, the same box is worth 190CUC, more or less $210 US.

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Posted: 30 April 2011 12:11 PM   [ Ignore ]   [ # 3 ]
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If the embargo is lifted I imagine the prices will be similar to the price of Cuban’s in Canada.
However, when I order from my Cubans from Canada they give me a 10% discount per box and drop the sales tax.
So I supposed if they lift the embargo not much will change for myself.

Do yourself a favor, instead of wasting your money in Mexico on a fake box of Cohiba’s. Call the shop, talk to Yohji.
The number is 1 888 845 6111

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